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Elite Lake Austin properties will now pay city taxes

Council votes to fix the 1986 “mistake on the lake” that extended exemptions to 400 properties

Overhead view of a bend in the Colorado River with big houses on one side, bridge in background
View of Lake Austin from Mount Bonnell

Note: The Austin American-Statesman estimated that overall city property taxes—not just those on the added Lake Austin properties, as this story originally stated—would be about $665 million overall. The story has been updated to correct the error.

The Austin City Council has added 400 previously exempt Lake Austin properties to city tax rolls, KUT reported Thursday.

The council voted unanimously at its regular Thursday meeting to end the exemptions, which the City Budget Office estimated cost Austin $3 million in tax revenue, based on last year’s tax rate.

As the Austin American-Statesman’s Phil Jankowski explained in a report last month, the properties were exempted from paying city taxes when Austin annexed them from the state in 1891—a concession made because city wasn’t able to provide basic services to the area.

In 1986, when the area had yet to be developed energetically, the city made a pass at updating the (non-)taxing model but passed an ordinance that continued to allow exemptions to waterfront properties only. All property owners in the area now have access to city services, including police and fire protection, emergency medical services, and access to parks and libraries, and all are allowed to vote in bond elections.

Property owners in the area who are paying city taxes recently filed suit against the city to address the disparity. Thursday’s unanimous City Council vote to do so adds the 400 formerly exempt properties to the tax rolls. The Statesman story estimated that, based on the 2018-19 tax rate, city property taxes would total about $665 million.

Lake Austin

Lake Austin Blvd, Austin, TX 78703